SSTI Digest

If the first full week of the 2004 state legislative season is any indicator of the year's tone and tempo for tech-based economic development initiatives (TBED), then we're in for quite a ride.

Of the 18 governors presenting their State of the State or Budget Addresses between Jan. 6-14, all but four – Alaska, California, Vermont and Virginia – used the speech to highlight the importance of making future investments in science and technology to encourage economic growth. The supportive tone covered the political spectrum, with both conservative and progressive leaders touching on issues important to the TBED community. SSTI has highlighted excerpts from selected states in our first 2004 installment in the annual series, Tech Talkin' Govs.

Last Thursday, Gov. Jennifer Granholm signed bills to aid Michigan’s tool and die industry and to promote new venture capital investment in the state’s high-tech industries.

One of Granholm’s key themes in last year’s State of the State address was the importance of leveraging Michigan’s financial power to bring investment capital to the state. The venture capital bills signed today – Senate Bill 834, Senate Bill 835 and House Bill 5322 – create the Michigan Early Stage Venture Capital Investment Fund and provide tax credits for investors in the fund. Money in the fund could be invested in venture capital companies to promote investment in qualified businesses.

North Dakota Governor John Hoeven dedicated the lion's share of his State of the State Address to promoting a vision of economic growth for the state based entirely on technology-based economic development. The proposals centered on more than a dozen new university-based Centers of Excellence and new tax credits.

"I challenge all of us today to share a vision; a vision of what North Dakota can be. And I challenge all of us to work together to make that vision a reality. The future I speak of has Centers of Excellence multiplying across all of our state's college campuses, creating new enterprises, opportunity, and good paying jobs. It is a vision where a technology corridor drives growth in the east, where an energy corridor drives growth in the west and where value-added agriculture, advanced manufacturing and tourism enterprises flourish throughout our state."

New York Governor George Pataki, in his 10th State of the State Address last week, outlined a variety of initiatives designed to further promote tech-based economic development (TBED) in the state. From refining the state's Empire Zones program and strengthening the manufacturing sector to making New York a leader in renewable energy and academic research, the governor's agenda is not short on TBED items.

To strengthen the state's Empire Zones, a target of much criticism lately, Gov. Pataki proposes revising it in such a way that reduces the potential for abuse. A comprehensive interagency reporting system, new methods to advance significant economic development projects with "substantial job-creating potential" and accountability measures would be undertaken. Economically challenged communities targeted for redevelopment also would benefit under the governor's plan, which would extend the tax credit program by five years to July 31, 2009.

Idaho Governor Dirk Kempthorne dedicated a portion of Monday's State of the State and Budget Address to describing how tight the 2005 fiscal environment would be for his state. The temporary sales tax will lapse, costing the state $170 million in foregone revenue. The one-time $83 million in federal bailout funds are depleted. State employees will get a 27th biweekly paycheck this calendar year, resulting in an additional budgetary burden of approximately $20 million.

That $273 million could represent 13 percent of the state's $2.083 billion budget. Add an $11 million expected increase in health insurance for state workers and the ever-escalating cost of Medicare, and the forecast is less than rosy.

As a result, the opportunity to let a couple of small tax credits expire quietly – tax credits affecting only a small portion of the governor's constituency and costing more than $2.5 million – might be appealing.

"If our children are to have the kind of jobs we want them to, this type of facility is one of the finest advantages we can give them for many generations," said South Dakota Governor Mike Rounds in his 2004 State of the State Address on Tuesday.

The governor is urging legislators to approve plans to help transform an exhausted 8,000-foot-deep gold mine into a one-of-a-kind national laboratory to study subatomic particles.

Since May 2003, the National Science Foundation (NSF) has considered the Homestake Mine to be the preferred location nationally for the Deep Underground Science and Engineering Laboratory, according to the governor's office. The deal is not closed, however, because of several outstanding issues, including ownership, indemnity, structural integrity and financing. NSF could still decide not to establish the lab at all.

Arizona

Gov. Janet Napolitano, State of the State Address, Jan. 12, 2004

"The Governor's Council on Innovation and Technology recently released a blueprint for developing Arizona's tech industries, so that we can become pace setters in an increasingly competitive arena. [Note: See the Jan. 9 issue of the SSTI Weekly Digest for details.]

Commerce Secretary Don Evans is expected to release today the Bush Administration's plan for economic growth in the manufacturing sector. According to today's Washington Post, the report will "throw President Bush's support to the Manufacturing Extension Partnership... Evans said he will support the program but will demand that the centers coordinate with other programs so they are more efficient."

As the Digest goes to press, it is unclear whether the Administration's support of MEP will translate to restoring its budget to the $106.5 million it received in FY 2003. The Administration's FY 2004 budget proposed cutting the program to $12.9 million.